Barrick said the writedown reflects the fact that operating and sustaining capital costs are higher than anticipated at Lumwana, something that chief executive Jamie Sokalsky has indicated in recent weeks. A goodwill-related charge was anticipated by many analysts after Barrick acquired Lumwana for an extremely high price in the $7.3-billion takeover of Equinox Minerals Ltd.

The Barrick writedown comes less than 24 hours after Kinross Gold Corp. announced it was taking a US$3.2-billion impairment, mostly tied to its Tasiast project in Mauritania. Like Lumwana, Tasiast was acquired at an extremely high price and has struggled with rising costs. A number of other large miners have written down assets in recent months that they paid too much for, including Rio Tinto Ltd. and Cliffs Natural Resources Inc.

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After the impairment is stripped out, Barrick’s fourth quarter earnings were strong. Adjusted net income was US$1.11-billion, or US$1.11 a share. That topped the consensus analyst estimate of US$1.05 a share.

“Investors are rightfully demanding fundamental change in the gold industry, and Barrick is driving this new paradigm,” he said in a statement. It was effectively a mea culpa for the Lumwana writedown.

Barrick, the world’s biggest gold company, also said that capital costs at its giant Pascua-Lama are still projected to be US$8-billion to US$8.5-billion. It is a relief for investors, as that project has faced enormous cost escalation, but now appears to be under control.

Barrick said it produced 7.42 million ounces in 2012, and forecast 2013 production of seven to 7.4 million ounces. Cash costs are expected to be US$1,000 to US$1,100 an ounce using the new “all-in” measure that senior gold companies have adopted.

The company has deferred US$4-billion of previously-budgeted capital spending, and said it has no plans to build “any” new mines in today’s challenging market conditions. This was not a surprise, as Barrick previously said that the economics of its large development projects are not strong enough to justify building them right now.

Barrick also scrapped expansion plans at Lumwana in light of the mine’s poor performance.

“We need to implement a significant change in the mine’s future performance in order to realize its potential,” Mr. Sokalsky said, though he remained upbeat on Lumwana’s future.